Correlation Between Itasa Investimentos and Centrais Eltricas
Can any of the company-specific risk be diversified away by investing in both Itasa Investimentos and Centrais Eltricas at the same time? Although using a correlation coefficient on its own may not help to predict future stock returns, this module helps to understand the diversifiable risk of combining Itasa Investimentos and Centrais Eltricas into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Itasa Investimentos and Centrais Eltricas Brasileiras, you can compare the effects of market volatilities on Itasa Investimentos and Centrais Eltricas and check how they will diversify away market risk if combined in the same portfolio for a given time horizon. You can also utilize pair trading strategies of matching a long position in Itasa Investimentos with a short position of Centrais Eltricas. Check out your portfolio center. Please also check ongoing floating volatility patterns of Itasa Investimentos and Centrais Eltricas.
Diversification Opportunities for Itasa Investimentos and Centrais Eltricas
0.84 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Itasa and Centrais is 0.84. Overlapping area represents the amount of risk that can be diversified away by holding Itasa Investimentos and Centrais Eltricas Brasileiras in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Centrais Eltricas and Itasa Investimentos is a relative statistical measure of the degree to which these equity instruments tend to move together. The correlation coefficient measures the extent to which returns on Itasa Investimentos are associated (or correlated) with Centrais Eltricas. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Centrais Eltricas has no effect on the direction of Itasa Investimentos i.e., Itasa Investimentos and Centrais Eltricas go up and down completely randomly.
Pair Corralation between Itasa Investimentos and Centrais Eltricas
Assuming the 90 days trading horizon Itasa Investimentos is expected to generate 1.01 times more return on investment than Centrais Eltricas. However, Itasa Investimentos is 1.01 times more volatile than Centrais Eltricas Brasileiras. It trades about -0.18 of its potential returns per unit of risk. Centrais Eltricas Brasileiras is currently generating about -0.23 per unit of risk. If you would invest 1,056 in Itasa Investimentos on September 1, 2024 and sell it today you would lose (63.00) from holding Itasa Investimentos or give up 5.97% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Itasa Investimentos vs. Centrais Eltricas Brasileiras
Performance |
| Timeline |
| Itasa Investimentos |
| Centrais Eltricas |
Itasa Investimentos and Centrais Eltricas Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Itasa Investimentos and Centrais Eltricas
The main advantage of trading using opposite Itasa Investimentos and Centrais Eltricas positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Itasa Investimentos position performs unexpectedly, Centrais Eltricas can make up some of the losses. Pair trading also minimizes risk from directional movements in the market. For example, if an entire industry or sector drops because of unexpected headlines, the short position in Centrais Eltricas will offset losses from the drop in Centrais Eltricas' long position.| Itasa Investimentos vs. Ita Unibanco Holding | Itasa Investimentos vs. Banco Bradesco SA | Itasa Investimentos vs. WEG SA | Itasa Investimentos vs. Engie Brasil Energia |
| Centrais Eltricas vs. Centrais Eltricas Brasileiras | Centrais Eltricas vs. Companhia Energtica de | Centrais Eltricas vs. Companhia Paranaense de | Centrais Eltricas vs. Companhia de Saneamento |
Check out your portfolio center.Note that this page's information should be used as a complementary analysis to find the right mix of equity instruments to add to your existing portfolios or create a brand new portfolio. You can also try the Headlines Timeline module to stay connected to all market stories and filter out noise. Drill down to analyze hype elasticity.
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